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Can You Make a Mortgage Payment By Credit Card? Everything You Need to Know
6 min read
I try to pay for almost everything with my credit cards. I love earning points on my purchases — and since I pay my credit card bills in full each month, I avoid all interest charges.
Translation? I get hundreds of dollars in rewards for nothing more than my cards’ annual fees.
If you’re trying to meet a minimum spend for a big signup bonus, or simply want to maximize your points earning, you might be wondering: Can I make mortgage payments by credit card?
The answer is yes, though it’s not as easy as you might hope. In this post, I explain exactly how you can do so, then list six great credit cards for paying your mortgage.
How to Make Your Mortgage Payment By Credit Card
Since most lenders won’t let you charge your mortgage to a credit card, you’ll have to use a third-party payment service.
The most popular service is called Plastiq. It allows you to make payments on a variety of bills — including your student loans, mortgage, and rent — with a credit card. After using your credit card to pay Plastiq, it issues a check or electronic payment to your mortgage lender. Plastiq also accepts payments via debit card, but you typically won’t earn rewards and will still pay a fee.
While convenient, this third-party service comes with two major stipulations:
- You can only use Mastercard or Discover: Visa and American Express don’t support mortgage payments through the platform.
- You’ll pay a 2.5% transaction fee: On a $1,000 mortgage payment, for example, you’d owe $25 in fees. Over the course of a year, that’d add up to $300.
Plastiq occasionally has promotions during which it lowers its fees; to stay on top of these offers, sign up for its email newsletter.
A few more things to be aware of when using Plastiq:
- Payment can take up to eight business days: To avoid late fees, schedule your payment well in advance.
- Credit card terms change frequently: If your card issuer decides to code a Plastiq transaction as a cash advance, you’ll be on the hook for high fees. So check with your issuer before paying any bills through this service.
While I think Plastiq makes the most sense, you may also hear about another strategy called “manufactured spend.” This entails using your credit card to purchase prepaid Visa, Mastercard, or Amex gift cards, using the prepaid cards to purchase money orders, and then using the money orders to pay your mortgage.
Besides being convoluted and time-consuming, this approach incurs fees and probably violates the terms of your credit card agreement. Card issuers have also cracked down on previously popular options like the Target Redbird and Amex Bluebird and Serve cards, making it seem pretty hit-or-miss. Engaging in manufactured spend could result in having your accounts shut down, so we don’t recommend it.
3 Times Making a Mortgage Payment By Credit Card Might Be Worth It
Since Plastiq is the most viable option for paying mortgages with a credit card, that’s what we’ll focus on below. Here are three occasions when using the service might be a smart idea.
1. Your Credit Card Earns More Than 2.5% Rewards
As noted above, Plastiq charges 2.5% to use your Mastercard or Discover to make mortgage payments. On a $1,000 mortgage, that adds up to $25 per month, or $300 per year.
So, to make it worth it, you’d have to earn credit card rewards greater than 2.5%. One credit card to offer this is the Discover it® Miles (Review), which offers 1.5X miles on everything — and doubles your rewards at the end of your first year for a total of 3X. You can redeem those miles for statement credits, effectively earning 3% cash back.
If you paid your mortgage with the card ($12,000 over 12 months), you’d earn $360 (3%). You’d have also paid $300 in transaction fees, netting you $60 in rewards. Worth it? Perhaps. But only for the first year; after that, you’d earn a total of 1.5% cash back, meaning you’d lose 1 percent by using Plastiq.
Cash back credit cards that offer better than 2.5% cash back for non-category purchases are quite rare. One avenue to consider may be travel rewards credit cards that offer points or miles, and usually provide 1X point or mile for non-category purchases. You might be able to redeem those points or miles to get a cash back equivalent of more than 2.5% — but it’ll depend greatly on how you use the rewards.
2. You’re Chasing a Big Signup Bonus
Some credit card companies offer huge signup bonuses if you spend a certain amount within the first several months. If you get a new card and can’t meet the minimum spending requirement with your normal purchases, then paying your mortgage with the card is better than buying things you don’t need.
Take the Barclaycard Arrival Plus® World Elite Mastercard® (Review), which offers 70,000 bonus miles after spending $5,000 in the first 90 days.
- If you normally spend about $1,000 per month on your credit card, you’ll come up $2,000 short. So, instead of spending $2,000 on miscellaneous kitchen gadgets at Macy’s, you could pay your mortgage instead.
- If you used your card to pay your $1,000 mortgage for two months, you’d pay $50 in fees (2.5% x $2,000). Since this card’s annual fee is waived for the first year, that’s the only fee you’d pay.
In return, you’d get a total of 80,000 miles ($5,000 x 2X miles/dollar, plus the 70,000-mile bonus). That’s equivalent to $800 worth of travel! Or, in other words, you’d get a 16% overall return on your spending, which would totally eclipse the 2.5% transaction fee.
3. You’re Close to Achieving Elite Status
Some airline- and hotel-affiliated rewards cards offer assistance with achieving elite status when you spend a certain amount in a year.
While you probably wouldn’t be able to achieve elite status by paying your mortgage alone, doing so could help push you over the edge.
Here are two examples:
- JetBlue Plus Card: Earn Mosaic status after spending $50,000 on the card in a year. You’ll get waived cancellation and change fees, free checked bags, priority security and boarding, and complimentary in-flight alcoholic beverages.
- Citi® / AAdvantage® Executive World Elite™ Mastercard®: Get 10,000 EQMs (Elite Qualifying Miles) after spending $40,000 in the first year. To achieve AA’s lowest tier elite status, you’ll need a total of 25,000 EQMs. Once there, you’ll get complimentary upgrades on flights 500 miles or less, a 40% elite mileage bonus, complimentary preferred seats, and one free checked bag.
1 Big Drawback of Paying Your Mortgage With a Credit Card
In addition to completing the cost-benefit analysis mentioned above, you should also understand how making a mortgage payment by credit card will affect your credit.
Whenever you put a big purchase on your credit card, it reduces the amount of available credit you have — and therefore increases your credit utilization ratio. If you regularly put mortgage payments on your credit cards, this could significantly reduce your credit scores (especially if your credit limit is low).
6 Best Credit Cards to Pay Your Mortgage With
The options for paying a mortgage with a credit card have consistently narrowed over the past few years. So before applying for any of the cards below, verify with the card network and issuer, as well as your mortgage company, that you can pay mortgages through Plastiq — and that you’ll earn rewards.
While there aren’t any perfect credit cards for paying mortgages, here are the six best options available today (at least when it comes to basic spending rewards). If you’re interested in using mortgage payments to reach minimum spend requirements for signup bonuses, check out the Best Credit Card Signup Bonus Offers.
Not all of them will be able to completely offset the 2.5% fee, but they could reduce it quite a bit. The travel cards, in particular, will only be able to offset the fee if you find a good redemption deal.
securely on the issuer's website
- Annual fee: $0
- Introductory bonus: None
- Rewards: 1.5X miles per dollar, plus a mile match at the end of your first year (for a total of 3X miles per dollar during your first year)
- Perks: No blackout dates
- Purchase APR: 0% for 14 months, then 13.74%–24.74% Variable
securely on the issuer's website
Discover it® Business Card
Details
- Annual fee: $0
- Introductory bonus: None
- Rewards: 1.5% cash back on all purchases, with double cash back at the end of the first year
- Perks: No penalty APR for late payments
- Purchase APR: 0% for 12 months, then 14.74%–22.74% Variable
securely on the issuer's website
Citi® Double Cash Card - 18 month BT offer
Details
- Annual fee: $0
- Introductory bonus: None
- Rewards: 2% cash back (1% on purchases and 1% on payments)
- Perks: First late payment fee is waived
- Purchase APR: 15.74%– 25.74% (Variable)
- Annual fee: $89, $0 first year
- Introductory bonus: 70,000 bonus miles after spending $5,000 in the first 90 days
- Rewards: 2X miles per dollar
- Perks: 5% miles back on every redemption
- Purchase APR: 18.24%, 22.24% or 25.24% Variable
- Annual fee: $89
- Introductory bonus: 80,000 points after spending $2,000 in the first 3 months
- Rewards for the first 12 months: 40X points per dollar at IHG (25X from the card, 15X for IHG Platinum Elite status); 4X on everything else
- Rewards after the first 12 months: 25X points per dollar at IHG (10X from the card, 15X for IHG Platinum Elite status); 2X at gas stations, grocery stores, and restaurants; 1X on everything else
- Perks: 10,000 bonus points after you spend $20,000 (and make one additional purchase) each anniversary year, one free anniversary night annually, fourth night free when redeeming points
- Purchase APR: 17.74% - 24.74% Variable
securely on the issuer's website
Citi® / AAdvantage® Executive World Elite™ Mastercard®
Details
- Annual fee: $450
- Introductory bonus: 50,000 miles after spending $5,000 in the first 3 months
- Rewards: 2X miles per dollar at American Airlines; 1X on everything else
- Perks: Admirals Club membership, 10,000 Elite Qualifying Miles (EQMs) after spending $40,000 in a year, priority check-in and boarding, first checked bag free, $100 Global Entry or TSA Pre✓ fee credit
- Purchase APR: 17.49%-25.49%* (Variable)
When deciding whether you should make your mortgage payment by credit card, first ensure you have the money to pay your bill in full when it comes. And then carefully compare the potential rewards and fees. In some lucky cases, you just might come out on top!
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